Taxation in Liechtenstein is governed by Tax Act 2010. The law was put in force in 2011 and manifold amendments were adopted. Reforms undertaken by Liechtenstein government were meant to build up a more favourable image for inward investment and enable a friendlier business environment. The improved taxation system has a reputation for its reasonableness, logic and flexibility. All the taxation regulations were made compatible with the European Union legislation as well. Liechtenstein taxation system became more flexible; the rules of tax levitation were simplified for convenience's sake. Instead of a regular progressive taxation scale, the country adopted a seven bracket schedule.
Liechtenstein's taxation system includes the following rates:
- Profit tax's moderate rate is 12,5%, while its maximum is 20%
- Individual income tax in Liechtenstein is 1.2%. Together with 'super tax' (additional income tax), the rate increases to 17.8%. Liechtenstein's welfare program additionally levies on all workforces an extra income-duty rate of 4.3%. Freelancers and the self-employed are to pay a tax of 11% at maximum
- Wealth tax consists of 0.06% and is paid annually